Reimagining operating models of the future to thrive

Time to play “offense”

While leaders all over the globe have been focused on responding and recovering from COVID-19, questions about operating models of the future continue to loom and need to be addressed soon in order to emerge successfully on the other side:

• What should “business as usual” look like 15 months from now? How do we begin that journey now?
• How should work be distributed and delivered across the enterprise, and what will the resulting operating models look like?
• What kinds of enabling capabilities will be critical to thriving in the new normal?
• How will we balance reduced budgets and increased need for investments?

It’s time to consider the long view of operating in a digitally disrupted, post–COVID-19 pandemic world. Yes, it’s a tall order. Preparing for what’s to come is going to take careful thought, but doing so will set successful leaders apart by setting the right foundation and shaping actions they are taking today to pave the way for the future. One starting point is to consider how business operations (mission or front-office and mission support functions) should be delivered across the enterprise, in light of both the pandemic and preexisting digital and market disruptions that the pandemic accelerated. It also becomes critical to consider what enabling capabilities (for example, culture, governance, performance management, data management, and customer engagement) are needed to help thrive in the new normal.

Long-held beliefs and orthodoxies about how and where work must be done, and by whom, have been challenged. Key attributes of resiliency and adaptability that had been set in motion over the past few years have been further validated as “must-haves,” and the need for convergence and integration of traditionally siloed considerations has been highlighted once again.

To incorporate these attributes and to thrive in the new normal, organizations need to rapidly reimagine elements of their operating models in a holistic and integrated way. Here we will explore ways to begin that reimagination—focused on the distribution and delivery of work across the enterprise and between humans and technology, which can open the door to more wide-ranging reimagination of work and its outcomes.

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What will set successful leaders apart post-COVID-19?

Orthodoxies that organizations had been trying to challenge as a result of digital disruption and new customer and employee expectations over the past few years have been overturned overnight as a result of the COVID-19 crisis. This has highlighted key attributes of success, which is now more defined in terms of agility and resiliency while driving efficiencies to do more with less.

These attributes are no longer “nice-to-haves,” but have become “must-haves” for organizations to emerge successfully from the crisis and to thrive in the long run:¹

• Cross-functional collaboration: Those organizations that were able to bring together various functions and functional leaders (CXOs) faster and more organically were able to make well-informed and quicker decisions to respond to the effects of the pandemic. The most innovative organizations build cross-functional collaboration into the fabric of their operations, something that is becoming the new norm.
• Resource sharing and talent agility: Better cross-training programs and pooling of talent, with a greater range of skills—while enabling specialization with standardization—improves ability to react to changes, shift work across sites, and accelerate career progress for employees.
• Dynamic partner ecosystem: Ability to rely on a network of leading partners across the ecosystem increases flexibility and options for unforeseen circumstances while fueling innovation. More dynamic and nuanced business partnerships with on-demand or surge capabilities can improve resiliency and adaptability.
• Seamless customer and employee experience: By generating seamless experiences through proactive mechanisms and channels—not only through use of collaboration tools and solutions—to engage with customers and employees on an ongoing basis can make it easier to take them along a journey and stay connected through any kind of change.
• Data and information availability: Real-time digital reporting enables swift decision-making and predictive insights on possible trends that can affect the business.
• Operational responsiveness: Clear decision rights, defined business continuity and disaster recovery plans with corresponding metrics, and regular scenario testing enable future responsiveness and the ability to shift work seamlessly. Existing BCP plans were not enough.
• Digital integration and modernization: Digitization and standardization of processes (where possible) enables flexibility in delivery location, team, and delivery partner. Continuing to operate on legacy systems that are not agile is no longer acceptable. Success lies in transitioning to the cloud, replacing legacy systems, or leveraging digital orchestration tools (where a complete technology overhaul is not possible) to deliver insights to end users irrespective of where the source data resides.

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Reimagining your future operating model with a holistic and integrated lens

One theme that emerges across these attributes is that of “convergence” and integration. Digital and recent disruptions are increasingly blurring the lines between functions, competitors, and suppliers, as well as redefining human- and technology-driven work. As budgets continue to shrink and organizations are expected to deliver the same or more value, it calls for a reimagination of how work is delivered across the enterprise. This reimagination requires four layers of evaluation for each enterprise function in an integrated way, either as a stand-alone strategic initiative or incorporated into larger transformation efforts, bolstering the existing value proposition:

1. Inherent nature of work: Evaluate the inherent nature of work to determine which parts are inherently transactional (operational and predictable) and which parts are analytical and insight-based.
2. Relationship to business: Evaluate the relationship to business to determine what work should be delivered centrally or on a shared and standardized basis across multiple organizational units (functions or business) to drive economies of scale, versus what should be unique to the business and tailored to the business or function.
3. Opportunity for technology enablement: Evaluate opportunity for technology enablement to determine what activities are candidates for robotic process and intelligent automation or artificial intelligence (such as pattern recognition and predictive analysis at speed and scale). This enables distinguishing between primarily human-centric work and technology- or machine-centric work while acknowledging and architecting the increased fusing between human- and technology-centric work.
4. Feasibility of virtual: Evaluate feasibility of virtual (for example, work from home) versus in the office and on-site. This examination doesn’t necessarily have a binary or simple answer, but a range of potential answers. Certain kinds of work with limited need for collaboration can potentially be done 100% virtually, but other kinds may only be done 50% virtually. Additionally, leaders should challenge the idea that simply because something can be done virtually, it should be. That may not be true for reasons related to driving community-building, culture, innovation, and cross-functional teaming.
   

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Illustrative example (portion of the finance function)

The illustrative example in figure 2 below shows a selection of activities in the finance function plotted on the framework. Blue, italic text indicates opportunity for virtual delivery, with black, nonitalic being traditional, on-site (in-office) delivery. This example reflects an organization’s operating model that is moving toward enterprise consolidation, automation, and virtual delivery for most of the function, but also shows the required balance, with some processes still requiring local, in-person delivery (for example, asset reconciliation) based on the nature of work.

Click image to enlarge

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Designing future operating models for value and impact

Every enterprise is unique in how it operates, and a one-size-fits-all solution does not work. Operating model choices depend on the organization’s vision and overall business model. Both will drive how work is distributed and organized in the enterprise, meaning that shifts at the strategic level (for example, a business model shift from product innovation to operational efficiency) will flow down to the operating model elements, including how work is distributed across the enterprise. The level of shift an organization undertakes will depend on the organization’s current maturity, culture, and leadership, among other factors.

In addition to business model shifts, as organizations move from a decentralized and holding company–type model to an integrated model, more work is consolidated, integrated, standardized, and delivered at an enterprise level while leaving certain work at the local and business levels that is unique to those entities and must be delivered closer to the business for optimal benefit. With a shift toward a more integrated model, as seen in the figure below, organizations also closely integrate technologies and machines with humans not only to drive greater efficiencies, but also to enhance the human experience and engagement—as a result, work is concentrated more toward the bottom and two ends of the work delivery framework.

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Click image to enlarge

Doing more with less through intelligent automation and consolidation

Reimagining operating and service delivery models can reduce costs, increase business value, and enable organizations to do more with less. Investment in consolidation and intelligent automation complement one another and compound the benefits:

• The majority of companies achieve up to 15% annual productivity savings as a result of shared services consolidation.²
• Executives have estimated intelligent automation will provide an average cost reduction of 22% over the next three years.³ Additionally, among leaders that were early adopters of AI technology, 35% of public sector and 31% of private sector leaders said that freeing up workers to be more creative by automating tasks was one of the top benefits of AI that helped create more capacity in their organization.⁴
• More than 50% of organizations report payback periods of less than two years for consolidation⁵ and intelligent automation.⁶

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What does the journey to reimagined operating models look like?

The length and complexity of the journey to the new normal depends on your organizational aspirations and leadership ambition for the new normal, where you are today, and where you need to be to achieve that ambition. One size does not fit all.

However, there are certain common, critical aspects of the journey:

• Aligning leadership and stakeholders on a shared ambition for the future state via facilitated sessions, translating it into a set of common goals and strategic trade-offs required.
• Reimagining key elements of your operating model by addressing fundamental questions we have discussed related to how work and services are delivered across the enterprise, in an integrated way.
• Understanding the implications for your workforce, such as the need for reimagining roles (new and old) and labor pools; going beyond reskilling to resilience; balancing virtualization efficiencies with well-being, culture-building, and innovation; and facilitating cross-functional collaboration and measuring performance by outcomes—all leading to a hyper-focus on the human experience.
• Understanding the implications for your workplace in light of more nontraditional delivery and staffing models that the reimagined future enables.
• Reevaluating your enabling capabilities at a functional or enterprise level to determine readiness for the change, as well as volume of shift to shape the road map to the future.

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Are you prepared to thrive in the new normal?

The COVID-19 pandemic has fueled and accelerated the reimagination of work and operating models that was already in progress due to recent digital and market disruption. The focus now should be on adopting key resilient and adaptable practices to help thrive in the new normal and position the organization to react efficiently and effectively to future events, as well as market opportunities, with an agile, dynamic operating model and leading-practice capabilities.

This pandemic provides a unique opportunity to play offense versus defense, take a more proactive approach to leveraging advancements in technology and new ways of working, and seize the opportunity to begin a transformation journey that will put your organization ahead of the curve. The opportunities and competitive advantage will dissipate with time, and organizations that haven’t shifted toward resilient, adaptable operating models are at the mercy of the next crisis. Can you afford to wait?

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Contact us with any questions or to jump-start your journey towards resilience with Deloitte’s “Reimagine to thrive” lab.

Endnotes

¹ Based on the Deloitte research report, GBS and shared services organizations moving forward: From pandemic to thriving, 2020
² Deloitte, Global Shared Services Survey, 2019.
³ Deloitte, Automation with Intelligence: Reimagining the organisation in the ‘Age of With’, 2019.
⁴ Deloitte, “Government executives on AI: Surveying how the public sector is approaching an AI-enabled future,” 2019.
⁵ Deloitte, Global Shared Services Survey.
⁶ Deloitte, Automation with Intelligence.